Thursday, September 25, 2008
"When a man is tired of London, he is tired of life."
Macro Man is tired of London. Frankly, he was tired of Madrid. And he's also tired of his little enclave in Surrey to which he retires each evening and weekend.
Have no fears, gentle readers. Your scribe is not perched on the ledge of a tall building, prepared to commit a gruesome kind of hari-kiri (for one thing, he is acrophobic.) He is far from tired of life. He is, however, tired of these markets, which seem to require 24-hour attention, seven days a week.
Perhaps it is the dark mornings; without sunshine and birdsong streaming through his window, Macro Man is naturally a bit groggier when the alarm goes off. However, his fatigue is more of an existential ennui; how many crises, miracle cures, and Sunday nights on the Bloomberg can one man take before the brain starts Operation Shutdown?
Not that he's begging for mercy, of course; attention to detail in stressful times is part of the job description. And stress remains highly evident in this market. The LIBOR/ICAP rates both surged higher yesterday; below is yesterday's chart updated with the latest fixes. Observe how ICAP 3 month rates are nearly 4% now!
The same sort of stress is evident further out the curve as well; 2 year swap spreads reached another record high yesterday, and are on another planet compared to any levels in Bloomberg's 20 year dataset. That Banesto is now giving away free motor vehicles with every large time deposit would appear to confirm Macro Man's suspicions that all is not quite right with European banks; one wonders what Miguel Indurain thought of the idea?
With markets moving as quickly as they are, traders (or at least Macro Man) feel like they must keep a closer eye than usual on both price action and their P/Ls. Of course, the downside to doing so is an all-to-frequent negative message resulting from downswings in the P/L. This month, for example, Macro Man has had twelve losing days and seven winning days. While he has managed to scrounge together a profitable month (knock on wood), thanks to the optionality in his book, it is still psychologically tiring to go home starting at a red number nearly twice as often as a black one.
By his count, he's only had two sleepless nights this month; he can only imagine how exhausted, mentally and physically, less fortunate market punters must feel. Readership figures also suggests that you, too, are feeling the strain. After surging last week, weekday visitor figures have retreated this week to more "normal" levels.
Sod's law suggests that the SCREW-U package will be voted on Saturday or Sunday, thereby depriving punters of yet another relaxing weekend. However, with quarter end rapidly approaching and the market evidently as fatigued as Macro Man, perhaps the surprising outcome of the next week would be that everything goes gentle into that good night.